Health, happiness and financial well-being

Financial well-being matters

Our spending, borrowing and saving habits are important for our quality of life – in all life stages. These habits are main ingredients of our financial well-being and important for us. Financial well-being has been found to be have a strong positive relation to our overall personal well-being. It for example impacts our health including stress and anxiety levels.

People with a healthy financial status are essentially happier and more confident and they have a more positive outlook on the future than people who experience some kind of financial stress. Financial well-being is not only important for us as individuals and in households but it is also important since it affects our productivity in the workplace and how we function in society.


Hence, financial well-being is relevant and important to recognise. All in all, the majority of people in western countries live rather comfortably. Reports, however, reveal that the amount of money that households set aside as a nest egg has decreased for most industrialised countries in recent years. A stable labour market and increase in consumption have led to greater private spending while the savings rates have declined to a record-low level. Young adults are particularly vulnerable and, in many countries, student loan debt is rising. And working-age people are known to be worried about not having enough money in later life but they still, paradoxically, do not increase their savings for retirement. Each of the trends is surprising especially as companies, organisations and policy makers are extensively trying to increase knowledge and offer tools to promote healthy spending.

Financial well-being is personal and subjective

Being able to pay our bills and cope with unexpected financial emergences, being able to make choices that allow us to enjoy life, and feeling secure about the future is important to us. The actual sums are actually less important than how well we think that we can manage our current and future expenses.

Nowadays many seem to believe that such a subjective approach is better than an objective numerical definition. This means that people can experience financial well-being – or lack of it – regardless of actual debt sum, income level or debt-to-income ratio. Financial well-being is idiosyncratic – complex and personal – and how people assess it depends on to what they compare their situation and what they prefer it to be. Thus, judging our own financial well-being while knowing how someone else assesses his or her, may be considerably trickier.

Financial well-being is a dynamic issue and can change, improve or weaken. Some life events, for example, have significant potential to change our financial behaviour and well-being. Many of these life events are employment-related, and they typically affect the income side if we for example lose our job, retire or start a company. Personal life events on the other hand, such as having children, buying a house, expenses for medical care for illness or injury, or separating, often increase expenditures.

When these situations arise, people who thought that they were financially healthy may notice that instead they are financially quite vulnerable and can face short-term or long-term personal crises. Bouncing back from these situations may require counselling from external parties. Having savings to handle such unexpected emergencies and to maintain their living standard may not occur to people’s mind until they happen.

Financial well-being to be explored

Because of the huge potential of the financial well-being as a topic, I would like to list a couple of ideas that could interest both companies and researchers to look into.

One area of ideas covers consequences of financial well-being. What makes financial well-being so meaningful is its relevance and its multi-faceted effects. Linking financial well-being to life-satisfaction and happiness, mental health, and relationships with others could generate novel insights into consumers and their lives.

Equally important are links to companies and organizations and also communities and societies, implying an eco-system or network perspective on financial well-being. This would benefit companies with financially distressed customers, but also other stakeholders. Spreading success stories and best practices of how to increase well-being in society, linking financial well-being to sustainability concerns, and discovering ways to simultaneously promote both, for the benefit of the whole society and the individual, could also entail ideas with business potential.

Another area of interest would pinpoint personal factors such as personal traits, financial practices, and zoom in on different life events. For example, financial behavior such as credit card use, gambling, compulsive buying, payday personal (online) loans, and over-indebtedness represent behavioral practices that are risky and costly for consumers and society and therefore warrant attention.

Similarly, self-efficacy (that is, the ability to manage financial problems and cope with setbacks) would be worth supporting through improved insight from intervention studies. Values such as materialism and the meaning of buying could be other topics that are particularly suitable to link to the topic of desired lifestyle and financial freedom of choice.

Money is a fundamental aspect of human life throughout the world. Many areas related to financial well-being should be encouraged from a marketing research perspective.

Lastly, I would like to recommend two papers for you who are interested in reading more about financial well-being. This paper presents a conceptualisation of financial well-being, a framework with five elements affecting it, and a list of suggestions for what should be done next to explore more:

  • Brüggen, E. C., Hogreve, J., Holmlund, M., Kabadayi, S., & Löfgren, M. (2017). Financial well-being: A conceptualization and research agenda. Journal of Business Research79, 228-237.

If you are interested in financial vulnerability, i.e. what poses risk factors to financial well-being, please read:

  • O’Connor, G. E., Newmeyer, C. E., Wong, N. Y. C., Bayuk, J. B., Cook, L. A., Komarova, Y., Loibl, C., Ong, L.L. & Warmath, D. (2018). Conceptualizing the multiple dimensions of consumer financial vulnerability. Forthcoming in Journal of Business Research.


Maria Holmlund-Rytkönen

Professor in Marketing